It's gonna get cold!

Have you heard about this? It's all over the news at least on this side of the big, blue, wet one.

We have been sick for a while so I didn't even read any news but this is a big deal, at least for us that live in the Balkans.

What sparked the gas wars?

On New Year's Eve, the deadline expired for Russia and Ukraine to agree a new contract for 2009 gas supplies. Moscow had wanted to raise its prices and charge Kiev $250 per 1,000 cubic metres, up from $179.5 last year. The Ukrainians thought that excessive and refused to pay a cent more than $201. Russia promptly put its price up to $450. Then at 10am on New Year's Day Russia's Gazprom halted supplies of all gas meant for domestic use in Ukraine.

So why are other European countries suffering?

It wasn't quite as simple as Moscow turning off the Ukraine gas tap. The EU gets about a fifth of its gas from Russia via the same pipes that pass through Ukraine. Russia cut the total volume of gas it was pumping by the amount Ukraine imports. But Russia says Ukraine stole some gas intended for Europe, and has cut deliveries by the same amount that was siphoned off.

Is this business or politics?

Russia's economy has been shaken by the credit crunch. Gazprom has debts of about $50bn and Russia's foreign reserves have dropped by more than a third, so Prime Minister Putin may be concerned about getting as much cash as possible for his gas. But the political dimension cannot be ignored given the bad blood between Kiev and Moscow. Mr Putin has not forgiven the Western-leaning President Viktor Yushchenko for sweeping to victory in the Orange Revolution in 2004, an animosity strengthened by Ukraine's ambition to join Nato and its support for Tbilisi in the Russia-Georgia war in August. Compare Ukraine with Belarus, which made supportive noises about South Ossetia and has been promised cheaper gas.

What happens next?

Kiev and Moscow need to return to the negotiating table, and with disruption starting to hit Europe, pressure for a deal is mounting. The EU is sending a mission to meet separately with Ukrainian and Russian officials, and if all else fails there could be a three-way EU gas summit. In the meantime, affected countries will have to rely on their gas stocks, which vary in size; for some, it's a matter of weeks, for others just days.

Claire Soares, Deputy Foreign Editor

As it stands Croatia is down to only 15% of the usual level they receive from Russia and are now on reserves. It's been reported that Croatia has enough gas to last for the next month and then if the situation with Russia doesn't change we will be without gas.

Our home heats by gas, cooks by gas and heats water by gas, so it looks like it could get really cold around here soon.
It has been in the teens for weeks now and it doesn't look like Spring will be here for a while so I guess I better start crocheting some scarves and gloves.